May 2016

May 2016

Cislo & Thomas LLP was a proud participant and exhibitor of the largest attended Orlando Annual Meeting hosted by the International Trademark Association on May 21 – 25. Over 10,000 individuals registered for the 138th Annual meeting, flying in from every corner of the globe.

At INTA, Cislo & Thomas LLP presented its PatentFiler.com online portal, which was well-received by both foreign associates and intellectual property attorneys in the United States. Cislo & Thomas LLP plans on attending the conference next year in Barcelona, Spain, with more exciting and cutting-edge technology that will help both clients and attorneys file quality provisional patent applications at optimal speeds and reasonable costs.

The New Trade Secrets Act (“DTSA”) Is Signed Into Law

Takeaway: Trade secrets that were once protected only at the state level are now under federalized trade secrets protection as well. One of the key immediate impact for employers is DTSA’s new requirement for employment and contractor agreements affecting confidential information.

The DTSA offers immunity for whistleblowers and requires that employment contracts provide employees with notice of their immunity. The DTSA provides civil and criminal immunity for employees and contractors who (1) disclose trade secrets in confidence to the government or their lawyers solely for the purpose of reporting or investigating a suspected violation of law, (2) disclose the trade secrets to their personal attorneys in connection with a lawsuit alleging retaliation for reporting a suspected violation of law, or (3) disclose or use the trade secret in any complaint or other document filed in a lawsuit, as long as they file the trade secret information under seal.

Consequently, the DTSA requires employers to provide notice of the foregoing immunity in any contract or agreement with an employee or contractor that governs the use of a trade secret or other confidential information. Alternatively, the employer may provide a cross-reference to a policy document provided to the employee or contractor that sets forth the employer’s policy for a suspected violation of law.

Employers will not be able to recover the full extent of remedies available under the DTSA if they fail to comply with the immunity notice provision, specifically exemplary damages (of up to two times actual damages) and attorneys’ fees for willful or malicious violations. Therefore, it is important for employers to incorporate the immunity notice into their relevant employment agreements and policies as soon as practicable.

Further, the DTSA will also allow employers to file civil lawsuits in federal court for trade secrets misappropriation by departing employees. For complex trade secret cases that may be cross-state or international cases, the federal courts may serve as a superior forum since there are more resources at the federal level to hear trade secret disputes and with more sophisticated review.

Famous Mark Case Dismissed at Seventh Circuit

Takeaway: In the Seventh Circuit, to bring a trademark infringement lawsuit, including by dilution or reverse confusion, the litigant must present evidence of harm or likelihood of harm.

In Hugunin, et al. v. Land O’ Lakes, Inc., Case No. 15-2815 (7th Cir., Mar. 1, 2016) (Posner, J), the court addressed the issue of whether a famous mark can be diluted by the identical mark of a much smaller company and agreed with the district court for dismissing the trademark infringement claims and cross-claims because neither party had been, or was likely to be, harmed by the other.

Plaintiff Land O’ Lake makes and sells fishing bait and tackle in Wisconsin and currently sells to retailers in several states. In 2000, the USPTO registered its trademark LAND O LAKES for fishing tackle.

The defendant and counterclaimant Land O’ Lakes, Inc. is located in Minnesota and sells butter and other dairy products throughout the United States since 1920, when the company was founded.

After learning that the plaintiff had registered LAND O LAKES as a trademark for fishing tackle, the defendant wrote to the plaintiff and told him that Land O’ Lakes’ trademark was “famous” and had been in use much longer. The plaintiff’s original registration had lapsed and when applying again, the defendants opposed at the Trademark Trial and Appeal Board (TTAB) and the application was suspended pending the outcome of litigation.

The Seventh Circuit found the parties’ concern over their marks perplexing because “[i]t would be strange indeed for a dairy company to manufacture a product so remote from milk, butter, and cream [as fishing tackle], and there is no sign that the dairy company intends to take the plunge.” Similarly, the Court found no facts that suggested that Land O’ Lakes intended to make or sell fishing tackle. Thus, the court emphasized that there was no evidence of any confusion, and on this basis, the infringement claims were dismissed.

As for the defendant’s counterclaims claiming that the plaintiff’s use of the LAND O LAKES trademark diluted the value of their identical trademark, the district court found that the dilution claim was barred by laches and would not have fit either form of dilution, blurring, or tarnishment.

The Court concluded that “in this unusual case two firms sued each other though neither had been, is, or is likely to be harmed in the slightest by the other. The suit was rightly dismissed.”

The Federal Circuit Confirms That Software Is Not Inherently Abstract and Still Patentable

Takeaway: The Federal Circuit finally confirms that there are types of software that are not inherently abstract, especially if the claims at issue were directed to specific features that improves the way a computer operates.

In Enfish, LLC v. Microsoft Corp (Fed. Cir. 2016), the Federal Circuit reversed, for the first time, a district court’s summary judgment that the patents-at-suit were invalid as ineligible under 35 U.S.C § 101 since the Supreme Court’s 2014 Alice decision.

The patents-at-suit were U.S. Patents No. 6,151,604 and No. 6,163,775, both of which related to a logical model for a computer database. More specifically, the patents describe a table wherein the rows correspond to records and columns correspond to attributes of the record, such that this table-based model is “self-referential” because all data entries are maintained in a single table.

The California district court found that the patents-at-suit were directed to an abstract idea of “organizing information using tabular formats” or more specifically, “storing, organizing, and retrieving memory in a logical table.” The Federal Circuit held that the district court improperly “oversimplified the self-referential component of the claims,” and that “the claims are not directed to just any form of storing tabular data, but to the specific ‘self-referential’ features of the database model claimed in the patents” that were “a specific improvement to the way computers operate, embodied in the self-referential table.”

The Federal Circuit further found that the claims at issue were directed to “a specific implementation of a solution to a problem in the software arts.” Thus, the court ended the analysis at the first part of the two-part Alice test, because it concluded that the patents were not directed to an abstract idea without providing an inventive concept sufficient to transform the claims into a patent-eligible invention.

The court further commented that the second step is for less clear cases wherein “an analysis of whether there are arguably concrete improvements in the recited computer technology could take place” to show that the patents are more than an abstract idea.

Provisional Patent Applications Are Prior Art Upon Their Filing Date Except Where No Non-Provisional Patent Claims Issue or Are Not Supported by the Provisional Patent’s Original Disclosure

Takeaway: With the explosive growth of patent filings and online publications, it is critical to file your patent application promptly.

Even after operating for half a decade under the Leahy Smith America Invents Act (“AIA”), patent practitioners often find it difficult to anticipate the evolution of case law pertaining to the conditions under which a patent may qualify as prior art as of its provisional application filing date. This is true both with respect to post-AIA and pre-AIA statutory interpretation. In Dynamic Drinkware, LLC v. Nat’l Graphics, Inc., 800 F.3d 1375 (Fed. Cir. 2015) [“Dynamic Drinkware”], we encounter an example of this strange world of prior art.

In Dynamic Drinkware, the court interpreted the pre-AIA version of [35 USC] § 102, and astoundingly denied the patent-defeating effect to a disclosure of a provisional application filing date despite the fact that the relevant disclosure was found in the provisional patent application.

By way of background, an IPR-appeal was initiated for the purpose of reviewing National’s Patent No. 6,635,196 which was applied for on November 22, 2000 but claimed priority to a provisional application filed in June of 2000. Dynamic Drinkware argued that the challenged patent was invalid as being anticipated in view of the provisional application (U.S. Patent 7,153,555, “Raymond”) that was filed in May 2000 but claimed priority back to a February 2000 provisional application filing.

Dynamic Drinkware argued that the provisional patent was substantially different from the subsequently-file non-provisional such that the provisional’s effectiveness as a prior art reference fatally suffered. The Court agreed, finding that the claims of the issued patent could not be supported by the provisional application, and that by extension, as a general rule, provisional applications used as prior art references may be disqualified as prior art if it can be demonstrated that a provisional application lacks support for the issued claims.

In other words, a patent used as a prior art reference that claims priority to a provisional does not instantaneously benefit from the priority filing date of the provisional patent application. Rather, the referenced patent only receives its provisional date where at least one claim of the patent is support by the provisional patent application.

As patent commentator Dennis Crouch stated, “Anyone who works with prior art knows that this setup is an oddball way to address the situation. A patent’s disclosure for prior art purposes should not depend upon what was claimed or not, but instead should focus on what was disclosed. My belief is that, once publicly available, all provisional applications should be considered prior art as of their filing dates.” Crouch, Federal Circuit Backtracks (A bit) on Prior Art Status ofProvisional Applications, Patently O (September 8, 2015).

With this criticism in mind, and in light of the potential for future evolution of the underlying case law, what are the best practices for practitioners and inventors to keep in mind moving forward?

As a general rule, a pending provisional patent application or an abandoned provisional patent does not qualify as “prior art” under 25 USC 102. A provisional patent application may mature into a prior art document only if it provides thorough written descriptive supportive of at least one claim of the issued patent. What a crazy way to consider whether a provisional patent is prior art!

Patent Eligibility of Natural Products Under New USPTO Guidance

Takeaway: The USPTO has offered new guidance as to what “natural products” might be patentable.

There are two new examples added in the USPTO patent eligibility examples for “natural products” based inventions. The new examples add Examples 28-33 to the USPTO’s body of patent eligibility examples, of which Examples 28 and 30 relate to natural products. One example relates to vaccines and the other relates to nature-based sweetener compositions.

For vaccines, the following are the USPTO examples of what satisfies and what does not satisfy patent subject matter eligibility.

[C]ompositions comprising a natural product (or a fragment of a natural product, such as a peptide antigen) and other components that are structurally-altered as compared to their naturally-occurring counterparts (e.g., a cream, emulsion, gel, liposome, nanoparticle, or ointment carrier) satisfy § 101; no “significantly more” analysis is required, but it could be important that the other components impact properties of the composition as a whole in a relevant way.

[C]ompositions comprising a natural product (or a fragment of a natural product) and another component that impacts the function of the natural product (e.g., an effective amount of an adjuvant) satisfy § 101; no “significantly more” analysis is required.

[C]ompositions comprising a natural product (or a fragment of a natural product”) and other components (e.g., a pharmaceutically acceptable carrier) do not satisfy § 101 if the components do not impart a different structure or function to each other, unless the claims can survive a “significantly more” analysis.

[D]evices (e.g., microneedles) comprising a natural product (or a fragment of a natural product”) do not satisfy § 101 unless the use of the device with the natural product was not well-understood, routine or conventional (e.g., unless the claims can survive a “significantly more” analysis).

For nature-based sweeteners, the following are the USPTO examples of what satisfies and what does not satisfy patent subject matter eligibility.

[C]ompositions comprising specified amounts (or ranges of amounts) of a natural product (e.g., a small molecule) and a carrier (e.g., water) do not satisfy § 101 where it was well-understood, routine and conventional to use that type of carrier with that type of product and to vary the relative amounts of each (e.g., where the claims do not survive a “significantly more” analysis).

[C]ompositions comprising a natural product and other naturally-occurring components satisfy § 101 if the combination as a whole has properties that are different in a way that is “relevant to the nature of the invention” (e.g., organoleptic properties or flavor profile); no “significantly more” analysis is required.

[C]ompositions comprising a natural product having specific physical characteristics (e.g., a specific particle size distribution) satisfy § 101 if the physical characteristic is associated with a different property that is “relevant to the nature of the invention”; no “significantly more” analysis is required.

[C]ompositions comprising a natural product in a controlled release formulation satisfy § 101 if the controlled release is “relevant to the nature of the invention”; no “significantly more” analysis is required.

The examples indicate the additional component(s) at issue must not be “well-understood, routine or conventional” in the field of the invention in order to satisfy § 101 and be patentable subject matter.

How to Create a Multiplier Affect with Patents

Takeaway: Patents add to a start-up’s strategic advantages.

Beyond serving as a tool for start-ups to get investments and protect their products or services, a patent can serve a startup company in many other ways that can achieve a multiplier effect.

A startup may not be the best fit in certain markets that its patent can be used in and therefore, by having licensing agreements that may be specified by markets, a startup may lease out the technology beyond their own business models to create extra revenue.

A startup may consider franchising their business in a way that includes use of the patent and wherein the franchisor still has control as to branding and the overall business model but can quickly operate in different markets.

If the products protected under the patent can address secondary problems, the startup may consider eventually spinning off that can be completely separate entities or as subsidiaries.

A startup short on investments may form a business deal with a vendor for manufacturing a product and negotiating a limited license agreement with the vendor.

Improving the USPTO’S System for Processing Patent Applications

Takeaway: The USPTO needs to improve patent examining by applying a different examination criteria.

The USPTO’s idealized system for processing patent applications has yet to be achieved because patent examiners, desiring to dispose of patent applications quickly, tend to give unreasonably broad interpretations to the claim terms in order to allow them to quickly find a reference that can serve as a basis for a rejection.

Although examiners are instructed to give claims their broadest reasonable interpretation pursuant to MPEP section 2111, from our experience, it appears that the examiners may be ignoring the specification and using the broadest possible interpretation of claim language so as to encompass more prior art.

Furthermore, patent examiners do not appear to adhere to MPEP 904.03, which states that “[i]t is normally not enough that references be selected to meet only the terms of the claims alone . . . but the search should, insofar as possible, also cover all subject matter which the examiner reasonably anticipates might be incorporated into applicant’s amendment.” (Emphasis added.)

To truly implement a proper system, the patent examiner should be incentivized to uncover the best prior art reference(s) available in the First Action on the Merits (FAOM) so that a second search would not be necessary based on any amendments. Therefore, if the invention is unpatentable, then the FAOM should demonstrate as much, not the second or any subsequent office action.

One way to implement a better system would be to change the count system. The current count system does not incentivize examiners to conduct the best search in advance of the FAOM. Under the current model, the examiner can receive a maximum of 2 counts on an original case. This is accomplished by issuing a FAOM (1.25 counts), issuing a final office action (Final) (0.25 count), then issuing an allowance or an abandonment (0.5 count).

Under this system, it appears the examiners are incentivized to issue a Final prior to an allowance. In fact, an examiner may conduct an inadequate search, knowing that after a response to the FAOM, a second search can be done, and a Final issued, so that the examiner receives the extra 0.25 count.